Adobe Reaffirms 4Q Views, Wants Recurring Revenue Boost
08 October 2009 - 6:06AM
Dow Jones News
Adobe Systems Inc. (ADBE) Wednesday reaffirmed its
fourth-quarter revenue and profit views as it discussed its plans
to increase the amount of recurring revenue it gets.
The San Jose, Calif.-based software maker said it expects
earnings per share, excluding items, of 33 cents to 39 cents for
the quarter ending Nov. 27. On a GAAP basis, including items, Adobe
expects earnings per share of 23 cents to 29 cents.
Adobe sees revenue of between $690 million and $740 million. It
expects an operating margin, excluding items, of 33% to 36%.
The figures are broadly in line with Wall Street analysts'
expectations for the quarter.
During a presentation with analysts in Los Angeles, Adobe
executives said they expected the acquisition of Internet
measurement firm Omniture Inc. (OMTR) would help Adobe boost the
proportion of its revenue that comes from recurring sources.
Adobe, which makes creative tools like Photoshop and Illustrator
along with the Acrobat PDF reader tool, agreed to acquire Omniture
for around $1.8 billion in September.
Omniture provides measurement and analysis tools for Web sites,
and Adobe's executives hope it will be a good fit with the
company's core products, primarily targeted at designers and
developers.
Although Adobe dominates the market for creative software, it
relies for the vast majority of its revenues on one-off sales,
making it particulalry vulnerable to economic cycles.
"At the moment, we get revenue as someone creates a piece of
content," Johnny Loiacono, who manages Adobe's creative products,
said during the presentation.
"Our goal is we want to move to be [making] both upfront revenue
and to produce recurring revenue," Loiacono said. "That's what
motivated moves like Omniture." He said that Adobe was piloting
subscription-based versions of its creative tools.
Loiacono said plans for the next release of Adobe's flagship
Creative Suite were underway, though he declined to provide a
launch date. Adobe's creative products, such as Photoshop, account
for around two-thirds of the company's revenues, which are forecast
to be around $3 billion for 2009.
Sales of Creative Suite 4, the most-recent version, have been
hit by the global recession. Chief Executive Shantanu Narayen said
in June that sales of the product were around 20% lower than at a
comparable point in the cycle for the previous version.
Around 2:30 p.m. EDT, Adobe shares were trading down 0.9% at
$33.20 in a mixed tech market.
-By Jessica Hodgson, Dow Jones Newswires; 415-439-6455;
jessica.hodgson@dowjones.com